Business Context and Reporting Period
Company: Ball Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: March 17, 2010
Reporting Period: Events occurring on March 17, 2010, and March 22, 2010.
This filing reports the entry into a material definitive agreement regarding a new debt offering and the triggering of a redemption event for existing debt.
Key Financial Metrics and Capital Structure
- New Debt Issuance: $500,000,000 aggregate principal amount of 6.75% Senior Notes due 2020 (the "2020 Notes").
- Offering Price: 100.000% of principal amount.
- Interest Payment Dates: March 15 and September 15, commencing September 15, 2010.
- Maturity Date: September 15, 2020.
- Debt Redemption: $509.0 million aggregate principal amount of 6.875% Senior Notes due 2012 (the "2012 Notes").
- Redemption Price: 101.146% of principal amount plus accrued interest.
- Redemption Date: April 21, 2010.
Material Changes and Transactions
The Company completed the sale of the 2020 Notes on March 22, 2010, under a shelf registration statement. The net proceeds from this offering, combined with borrowings from revolving credit facilities, accounts receivable securitization, or cash on hand, are designated to redeem the outstanding 2012 Notes.
The 2020 Notes are senior unsecured obligations, fully and unconditionally guaranteed on an unsecured senior basis by certain domestic subsidiaries. Foreign subsidiaries do not guarantee these notes.
Terms, Covenants, and Risks
- Redemption Rights (2020 Notes):
- Pre-March 15, 2015: Redeemable at 100% of principal plus a make-whole premium.
- Post-March 15, 2015: Redeemable at prices set forth in the Fourth Supplemental Indenture.
- Equity Proceeds: Prior to March 15, 2013, up to 35% of the principal may be redeemed at 106.75% using net cash proceeds from certain equity offerings.
- Covenants: The Indenture restricts additional debt, preferred stock issuance, dividends, investments, liens, asset sales, and affiliate transactions. These covenants may be waived if the notes achieve investment-grade ratings from two of three major rating agencies.
- Change of Control: Requires an offer to purchase the notes at 101% of principal plus accrued interest.
- Events of Default: Include nonpayment, breach of agreements, bankruptcy, and failure to pay judgments. Default allows holders of 25% of the notes to declare the entire amount due immediately.
Investor Verification Checklist
- Verify the exact amount of cash on hand and available credit facility capacity to ensure the full redemption of the $509.0 million 2012 Notes.
- Confirm the calculation of the make-whole premium for the 2020 Notes if early redemption is considered prior to March 15, 2015.
- Review the specific list of domestic subsidiaries providing guarantees versus excluded subsidiaries.
- Monitor the credit rating status of the 2020 Notes to determine if covenant restrictions will be lifted.
- Check the final settlement date and interest accrual calculations for the April 21, 2010 redemption of the 2012 Notes.